[Tiger Live Ⅱ] 2025 US Market Outlook: US Tariff

Here are my talk about US tariff. Full live link replay >>

About one month ago, Trump said he wanted to impose 25% tariffs on Canada and Mexico,and an additional 10% on China.

Basically, if the U.S. imposes tariffs on any country, that country will still want to export to the U.S. because it is difficult to find a replacement with the size and appetite of the U.S.

The common way to make your goods still look affordable to U.S. companies is through currency depreciation.

For example, in 2018-2019, the RMB depreciated as much as 13% when the U.S. imposed a 25% tariff on Chinese goods.

Trump’s tariffs are a negotiating tactic to reach a deal.

For instance, Trump wants Mexico to help stop illegal immigration, or he may want China to buy more U.S. soybeans.

If a country does not want to sell to the U.S. because of the tariff, the country may consider dumping—selling goods at below-market prices to other countries in order to capture market share.

However, this may prompt other countries to impose higher tariffs as well, as it would hurt local businesses.

To avoid the tariff, some companies may consider moving their factories overseas.
For example, they could relocate to ASEAN countries. However, this strategy may not be effective because,
firstly, reshoring factories takes time.
Secondly, the U.S. plans to increase taxes on countries that act as intermediaries in re-exporting goods to the U.S.
Thirdly, reshoring will hurt the labor market in the country facing the tariff.

To me, the best way for a country to defend itself from U.S. tariffs is through currency depreciation or by reaching a deal with the U.S. as soon as possible.

But if you ask me about the tariff's impact on the U.S., I would say it poses an inflation risk.

However, Trump is trying to deregulate the energy sector to bring down inflation and increase Americans' purchasing power to afford the inflated goods.

So, it’s too early to tell how bad inflation will be next year.

In any case, when Trump imposed tariffs on China in 2018, I don’t think I saw a spike in inflation. Inflation shot up in 2021 and 2022 due to supply chain bottlenecks caused by COVID-19.

So, if we take a lesson from the 2018 tariffs, maybe we won’t see inflation spiral out of control.

I think the U.S. will try to impose tariffs on countries that have the largest trade deficit with the U.S. and on countries that have had the highest increase in their trade deficit with the U.S. in 2023 compared to 2018.

These are some of the countries that may be at risk of higher tariffs.

But it's not all gloom and doom.

Companies can request tariff exemptions.

So, while tariffs may sound serious on paper, ultimately, if most companies are exempted from them, then you shouldn't be worried about the inflation risk.

Disclaimers: All investments involve risk, and it's crucial to conduct your own thorough research before making any trading decisions.

Comment（3）

Top
Latest

DeltaDrift
·12-25 11:21
Inflation pressure will surely persist, and usually, inflation is lagging, especially in Multi-Layered Industrial Structures, inflation progresses step by step until it reaches the consumers(CPI).
Reply
Like
Report
BellaFaraday
·12-25 11:18
Interesting insights
Reply
Like
Report
MR_Wu
·12-25 11:18
Interesting insight
Reply
Like
Report

To The Moon

[Tiger Live Ⅱ] 2025 US Market Outlook: US Tariff

Comment（3）

Most Discussed